100% Bonus Depreciation Opportunities

Your corporation may be able to significantly benefit from a short-term offer from Uncle Sam. But you need to plan now! This benefit can be used to significantly cut taxes to zero out your 2011 federal tax liability or provide an opportunity to carry back losses to reduce your income in a prior year to receive a refund on tax you already paid.

For a limited time, companies have the opportunity to write off 100 percent of qualifying asset purchases – and achieve major tax savings as a result. Now’s the time to examine the possible tax savings and take your findings to your corporation’s decision makers before the tax break goes away.

The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 increased the 50 percent depreciation deduction to 100 percent through 2011. In 2012, bonus depreciation reverts to 50 percent. Make sure those who make purchasing decisions for your company are aware of the tax implications of this bonus depreciation while there is still time to take advantage. Make sure needed equipment is purchased before December 31, 2011.

To be eligible for bonus depreciation, qualified property must meet the following equirements:

The asset must be depreciable under Modified Accelerated Cost Recovery System (MACRS) and have a recovery period of 20 years or less.

The property must be new and placed in service after September 8, 2010, and up until December 31, 2011.

There is a narrow exception to the “new” requirement: Leased equipment under a sale and leaseback that commences within three months of the purchase can qualify as new to the lessee, if the lessee is the first and only user of the equipment.